Public sector workers are increasingly unhappy with the 2% pay target.
The government and the trade unions seem to be on a collision course over plans to reform public sector pay with both teachers and civil servants going on strike this week, with more disputes in the pipeline.
Why is public sector pay an issue?
Trade unions representing workers in the public sector, including teachers, nurses, civil servants, and police officers, are angry about wages.
They say the government's pay offers, targeted at about 2%, are below retail price inflation and it is wrong that their members should take a pay cut when the government says its priority is improving public services.
They are also angry some of the pay deals awarded by independent pay review bodies have been staged - with part of the increase delayed - to save more money.
Increasingly the unions are looking to coordinate their actions, which brings back echoes of the "winter of discontent" in 1978 and 1979, when widespread strikes helped bring down the previous Labour government.
Why is the government standing firm on public sector pay?
Gordon Brown has made it clear that there will be no retreat on public sector pay, and has said that a tough pay settlement is crucial to maintaining the government's economic strategy of low inflation and steady growth.
The prime minister is worried that if public sector workers get more money, it could trigger requests for pay increases among private sector employees as well.
With the Bank of England worried about inflationary pressures as cuts interest rates to try to stimulate the economy, this has become particularly important.
In addition, the government is facing a big squeeze on public spending after years of big increases in investment in health and education.
The economic slowdown is affecting government revenues, and the years of big increases in public spending are now over.
To avoid breaking his fiscal rules and having a big budget deficit, while giving at least a bit more money to health and education - although less than before - the chancellor has to keep the lid on public sector pay.
And the government is insisting on more three-year public sector pay deals, rather than the previous pattern of one-year deals, in order to prevent higher wage increases in the future.
How have public sector workers fared under Labour?
Overall, government figures show that wages of public sector workers have risen faster than those of people in the private sector.
However, different sectors have fared quite differently, with health care workers such as nurses and doctors doing better overall than teachers or civil servants, and prison officers having the lowest increase.
But unions argue that the bigger-than-average increases during recent years of the Labour government were essentially "catching up" issues to make up for pay restraint in earlier years.
And they are concerned that lower-than-inflation pay rises in the future will lead to recruiting difficulties and staff shortages in some sectors.
What other public sector disputes are in the pipeline?
Members of the National Union of Teachers are involved in Thursday's industrial action.
Elsewhere in the education sector, two other teaching unions have accepted the pay review body's three-year deal, with a 2.45% rise for this year, with 2.3% in the next two years.
But university lecturers in further education are planning industrial action - they are angry that their wages are below those of teachers.
Prison officers rejected the government's 2.2% pay deal in March.
An injunction preventing industrial action expires on 8 May, when a new law making strikes in the prison service illegal comes into effect - but wildcat strikes occurred last year.
Police forces in England, Wales and Northern Ireland are still angry over the government's decision not to backdate their 2.5% pay rise, and are seeking a judicial review to overturn the government's decision.
And 500,000 health workers in the NHS are being balloted by their union Unison over a 2.75% pay deal, with a warning that industrial action could follow any rejection.
The Royal College of Nursing has recommended acceptance of the offer, but is also consulting its members until 28 May.
What happens next?
The government is hoping that the different circumstances in different industries, and the reluctance of many public sector workers, such as nurses, to strike will keep the situation under control.
It has also been making some conciliatory noises to the unions, not on pay, but on slowing the pace of privatisation and the introduction of market forces in health and education.
However, the weakening of the authority of the Prime Minister over the 10p tax issue will also make it more difficult for the government to stand firm in relation to low-paid public sector workers - although some of the tax concessions will also benefit their members.
The unions have been disappointed that Mr Brown's government has not delivered its promises, with the issue of temporary workers' rights a particular flashpoint.
And the public sector unions say that if the workers are demoralised by pay restraint and restructuring, the government will not be able to deliver its promises to improve public services.